Social cooperation, the italian way to non profit enterprise - 3-

ECONOMICS AND ASSETS

The situation as regards the economics and assets of social cooperative usually differs rather markedly from at of traditional cooperatives and firms: There are least five reasons for this:

1. the social cooperative’s close dependance on its local context and therefore its use of " non-monetizable" resources;

2. its evidently "labour-intensive" character and therefore the limited weight of capital expenditure in its overall budget;

3. the consequent prevalence of economics over assets;

4. the presence of "payers" who do not always coincide with the cooperative’s actual customers;

5. the period (often rather long)that elapses between delivery of the services and the payement by the third party.

The social cooperatives providing social, health or educational services often have to deal with customers (disadvantaged people)who are unable to meet the cost of purchase or are unable to choose among different suppliers. Apart from direct sales ti private individuals, with purchasing power (e.g. elderly people with good pensions or income support)therefore, they almost always work on behalf of a third-party payer. In most cases, the purchasers are local governements, with whom the social cooperatives stipulate contracts after private negotiation or after bidding for tender.

Economic support by the government or its local bodies sometimes also takes the form of grants, subsidies for production costs, loans and loan guarantees, tax exemptions, transfers in kind, the use or movable or immovable goods.

Not infrequently (although not as often as one would hope)economic help is also forthcoming from private citizens or sponsors (firms, banks, trusts)in support of the activities of social cooperatives. This limited ability to attract private financing is principally explained by legislation which, by not granting tax deductions to firms or individuals (as happens in the case of American non-profit organizations, for example), disincentivates private contributions to social cooperatives.

In the case of cooperatives providing work integration, their earnings derive principally from the sale of good and services on the market or to public authorities. These latter often allocate specific public-interest services to social cooperatives (e.g. the maintenance of public green spaces)following private negotiation or agreement in consideration of he cooperatives’ work in human enhancement and social integration.

The help provided by members, in the form of both contributions to running costs and voluntary work (which oftem helps to reduce costs), is frequently decisive in balancing the cooperative’s books and in providing it with he self-financing necessary for commercial viability.

As regards costa, analysis of the profit and loss accounts of more than 500 social cooperatives indicates that labour accounts for more than half of their total expenditure. If one adds to this the fact that instrumental goods (especially immovable goods)are often loaned to the cooperative by the public administration, and that amortization is therefore a relatively minor element in overall costs, one understands that the principal asset of the solidarity cooperative is its workforce.

Turning now financial aspects, one of he key aspects of social cooperation in Italy is the management of financial flows; that is the time that elapses between supply of the services and payment by the local body. This difficulty is often deal with by "discounting" to credit at the bank. Mention should also be made of the financial importance to the social cooperative of donations of movable and immovable goods made by private individuals and firms.

In conclusion, therefore, the financial problems of solidarity cooperatives are usually resolved when they are treated as "institutions of the local community". In fact, the local community can provide that surplus of resources (voluntary work, donations, new work opportunities, etc.)which is decisive in the social enterprise’s obtaining of self-financing to reinvest in its development.